As per notification 88/2020 -Central Tax dated 10th November 2020, All Registered persons (GST taxpayers) having an aggregate turnover above Rs. 100 crore in a financial year and Supplying goods and services to another registered person (also known as B2B supplies) is required to mandatorily issue an electronic invoice (commonly known as e-invoice) with effect from 1st January 2021 (https://einvoice1.gst.gov.in/Notifications/notfctn-88-central-taxenglish-2020.pdf).
E-Invoice will be a paradigm shift in the way the industry carries out invoicing and related activities. It will be a big leap forward in the digitization of the indirect tax structure, post introduction of GST almost three years back.
In ‘e-invoicing’, the invoice will be prepared after obtaining an Invoice Reference Number (IRN) by uploading specified particulars (in FORM GST INV-01) in the notified Invoice Registration Portals (IRP). E-invoicing does not mean the generation of invoices by a Government portal. E-invoicing facilitates invoice document exchange (structured invoice data) between a supplier and a buyer in an integrated electronic format.
Registered persons will continue to create their GST invoices in their own Accounting/Billing/ERP Systems. These invoices are then reported in ‘Invoice Registration Portal (IRP)’. On reporting, IRP returns the e-invoice with a singular ‘Invoice Reference Number (IRN)’ after digitally signing the e-invoice and adding a QR Code. Then, the invoice is often issued to the receiver (along with QR Code).
E-invoicing for whom:
It is mandatory for registered persons whose aggregate turnover (based on PAN) in a financial year is more than ₹500 Crores (aggregate annual turnover at PAN level) for supplies of goods or services or both made to a GST registered person (i.e., for B2B transactions).
With effect from 1st Jan’21, E-invoice is mandatory for all registered Business partners whose aggregate turnover exceeds INR 100 Crores in any of the preceding financial years from 2017-18 onwards.
Advantages of e-invoicing:
Broadly, e-invoicing is aimed to achieve the following advantages: –
– Standardization of invoice contents.
– Ensuring machine readability.
– Eliminating data entry errors.
– Ensuring complete interoperability across B2B ecosystem.
– Curbing tax evasion through checks on fraudulent ITC and elimination of fake invoices.
– Eliminating the need for reporting the same data into multiple formats by auto-filling of GST returns and E-way bill [Part A] details.
Entities exempted from e-invoicing:
The following entities have been exempted from the requirement of e-invoicing even though their turnover exceeds ₹100 Crores:
– Special Economic Zone Units.
– Banking companies, issuers, or financial organizations, including a non-banking financial organization.
– Goods transport agency supplying services in relation to transportation of goods by road in a goods carriage.
– Suppliers of passenger transportation service.
– Suppliers of services by way of admission to exhibition of cinematograph films on multiple screens.
Various modes for generation of e-invoice:
E-invoices generated can be:
– API based.
– Mobile app-based.
– Offline tool based &
– GST Suvidha Provider (GSP) based.
Digital Signature Certificate (DSC) is a means of electronically signing documents to verify the authenticity of the person signing the document. A Digital signature can be a substitute for a physical handwritten signature.
• Business partners can submit a soft copy of e-invoice (having digitally signed) to customers for faster processing and payment release.
• No need to deliver a hard copy of the invoice to the customers.
• Cost savings in terms of courier and postal charges
• One must submit and deliver a hard copy of the invoice to customers.
• Delay in payment release till the time original invoices are received by the customers.
• Extra cost burden related to printing, courier, and snail-mail delays and costs.